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Counterfeit Pharmaceuticals Supply Chain
Session 168 February 13, 2019
Alanna Lavelle, Senior Principal, MITRE Corporation
Cathy Begley, Executive Director, Merck
2019 The MITRE Corporation All Rights Reserved Approved for Public Release Case Number 16-2502
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• Learning Objectives
• The global problem of counterfeit and “fake” pharmaceuticals and
medical devices
• The intersection of cost, quality and outcomes in the supply chain
• Program integrity best practices
• Supply chain replicable strategies to address
Agenda
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• Discuss the worldwide problem of counterfeit and fake
pharmaceuticals and medical devices
• Identify strategies that address the intersection of cost, quality and
outcomes in the pharmaceutical supply chain
• Integrate best practices of supply chain strategies that address the
use of data analytics
• Discuss the construction and streamlining of supplier relationships
to promote risk sharing
Learning Objectives
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Counterfeit Medicines
• Counterfeit medicines are a significant threat to public safety
– The number of detected counterfeit incidents are increasing
– Counterfeiters are able to produce visually indistinguishable
copies of branded products
– Increase in counterfeiting of life-saving and sterile products
increases public safety risks
• Counterfeit medicines are a global public health risk
– Failure to receive intended therapeutic benefit
– Medical harm from toxic materials contained within
counterfeit formulations
– Adverse reactions from non-sterile injections of counterfeit
medicines
– Development of therapy-resistant strains due to substandard
counterfeit medicines
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US Approach to Combatting
Counterfeits
Drug Quality and Security Act (November 27, 2013)
Title I
• This law amended the Federal Food, Drug and Cosmetic Act to
grant the Food and Drug Administration more authority to regulate
and monitor the manufacturing of compounded drugs
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Approach to Combatting Pharmaceutical
Counterfeits in the United States
Title II: Drug Supply Chain Security Act (DSCSA)
https://www.fda.gov/Drugs/DrugSafety/DrugIntegrityandSupplyChainSecurity/DrugSupplyChainSecurityAct/
• Created requirements to facilitate the tracing of prescription drug
products through the pharmaceutical supply distribution chain
• Focuses on change of ownership rather than change of
possession
• Creates a transaction history that acts as title to the product
• Requirements for reporting suspect or illegitimate product
• Ultimately will create a databank for package level traceability
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Approach to Combatting Pharmaceutical
Counterfeits in the United States
Title II: Drug Supply Chain Security Act (DSCSA)
• Creates traceability from point of manufacture to dispenser
• Uses both 2D barcode and standardized numerical identifier
• Focuses on change of ownership rather than change of
possession
• Creates a transaction history that acts as title to the product
• Requirements for reporting suspect or illegitimate product
• Ultimately will create a databank for package level traceability
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DSCSA Timeline
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Pharmaceutical Supply Chain
Manufacturer
Commercial Distribution
“Retail”
Patients
Legitimate
Illegitimate
Finished
products
Distribution
warehouse
Distributors Distributors
Distributors
Hospitals
Pharmacies
Illegal Distributors
Illegal Retailers
Internet Sale
Counterfeit
products
Fraudulent product flow
Genuine product flow
Misbranded/ Diverted
products
Stolen products
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PREVENTING
Unauthorized access to
the supply chain
Theft and product loss
Vulnerability to acts of
terrorism
Introduction of
unmanifested material
and people into
shipments
Unlawful and
unauthorized use of the
supply chain
Opportunities to
counterfeit, divert and
tamper with products
Supply chain
disruption
Threats
Vulnerabilities
Supply Chain Security
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Supply Chain Security
Security Risk Management
Risk Assessment
Subject Matter Expert
Support
Regulatory & Trade
Security Compliance
CAPA
Industry Best Practices
Security Audit
Incident Management &
Investigative Support
Policy & Procedures
Minimum Security
Standards
Global Policy
Procurement Contract
Language
SOP Development
Support
Resource Guides/FAQ
Engagement & Awareness
Training Development
Stakeholder Outreach
Technology Assessment
Industry Intelligence
Awareness
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Product Integrity Trends
Rogue online drug sellers
Illegal generics of high value products
Organized criminal networks
Regulatory weaknesses
Drugs with limited access / availabilityDrugs of abuse / illicit value
Cargo Theft
Reverse distribution compromise
Reuse of authentic packaging components
Direct—to-physician marketing and distribution
Humanitarian/Charitable/Discounted Goods
Fraud
Counterfeit/diverted Biologics
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Blockchain (McKinsey and Company)*
*https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/blockchain-beyond-the-
hype-what-is-the-strategic-business-value.
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Blockchain
• According to Mckinsey,
“Blockchain is a distributed
ledger, or database, which
may be shared across a
public or private computing
network”
• “Each computer node in the
network holds a copy of the
ledger, so there is no single
point of failure”.
• “Every piece of information is
mathematically encrypted
and added as a new “block”
to the chain of historical
records”.
• “Various consensus
protocols are used to validate
a new block with other
participants before it can be
added to the chain”
• https://www.mckinsey.com/business-
functions/digital-mckinsey/our-
insights/blockchain-beyond-the-hype-
what-is-the-strategic-business-value.
https://www.investopedia.com/terms/b/blockchain.asphttps://
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Protect Merck/MSD products from external
illicit actions
• Counterfeiting
• Diversion
• Tampering/Adulteration
• Theft
Reactively respond to all Product Integrity
complaints and indications
Proactively identify, assess, and mitigate
Product Integrity threats to patients and
Company
• Focus on intelligence-driven actions and
outcomes
• Threat assessment High-value target
identification Target interdiction
Enable meaningful enforcement actions
• Criminal
• Civil
• Administrative
Enable effective product security and supply chain
security features and methodologies
Enable meaningful advocacy and awareness to
patients and other key stakeholders
Innovate to create additional capacity and/or
capability
Product Integrity Mission
Protect our Patients and Company Reputation
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Secure the Supply Chain
• Provide Supply Chain Security capacity that maintains the security and integrity of Merck
materials and products
• Deploy the use of anti-counterfeiting security features to prevent counterfeiting and tampering, and
enable rapid authentication of questioned materials
Investigations and Enforcement
• Provide intelligence-driven proactive and reactive investigative capacity engaging high-risk/high-
value targets
• Provide robust forensic analysis capability to identify and characterize illicit products
• Enable meaningful enforcement actions that mitigate identified/confirmed threats
Raise public and stakeholder awareness
• Create public awareness campaigns and other communication tools to effectively raise public
awareness of threats to public safety associated with illicit pharmaceutical products
• Advocate for policy and regulatory changes that further protect patient safety from these threats
• Provide industry thought leadership and collaboration to issues of illicit medicines
Use Data and Intelligence to meaningfully advance operational activities
Product Integrity Strategy
Protect our Patients and Company Reputation
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• Recognize and appreciate the
significance of the threat
• Don’t underestimate the
capabilities and applied effort of
the counterfeiter
– Highly motivated
– Will do anything to make
money
– Everything can be copied
– There are no rules
• Matter of supply and demand
– Can artificially create demand
– Need to create awareness of the
supply
– Someone will buy it
• Threat is constantly evolving
– What happened yesterday not
necessarily what is going to
happen tomorrow
– But we can be constantly learning
and applying what we’ve learned
What We Are Learning
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• Think like the bad guy
– What do we know about their
capabilities/limitations?
– What are the vulnerabilities in
our systems that can be
exploited?
– What is the next supply/demand
issue that creates opportunity for
counterfeiters?
• Develop effective threat detection
capabilities
– Identify triggers/indicators and
monitor for them
– Apply what we’ve learned to
predict additional threats
• Develop effective threat mitigation
capabilities
– Product security features: development
and application
• Develop effective enforcement strategies
– Collaborative relationships with LE to
support criminal actions
– Civil enforcements
– Administrative enforcements
• Mitigating external factors of Product
Integrity risks
What We Are Doing
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Targeted Products
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Social Media/Cyber Threats
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MITRE Proposal for Counterfeit
Analysis
• Identify diversion/insertion points
• Follow the Active Pharmaceutical Ingredients (API)
• Import/Export records
• Identify illicit supply chains
• Comparison to other fraud or criminal activities
• Harness social media information
• Develop profiles, detect patterns, identify hot spots
• Create model that anticipates movement
• Consider/execute Blockchain to include the tracking of
Opioids, Cold-Chain Pharmaceuticals and (API)
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The Network’s Analytic Cell Strategy
Using the Depth of MITRE and their partners
Pharmaceuticals
[picture]
Medical Devices
[picture]
Network Integrity
MITRE
Innovation
Analytic
Cells
